CASE 5 Clauses in a Car Purchase Contract Lauren Rowland is a dentist in Hebron, Kentucky, who recently entered into a contract to buy a new automo- bile. After signing to finance $38,000, she hurriedly left the office of the sales finance company with her copy of the contract. Later that evening, Lauren read the con tract and noticed several clausesan acceleration, a de ficiency payments, a recourse, and a rule of 78s. When she signed the contract, Lauren was told these standard clauses should not concern her. (a) Should Lauren be concerned about these clauses? Why or why not? (b) Considering the rule of 78s clause, what will hap- pen if Lauren pays off the loan before the regular due date? (c) If Lauren had financed the $38,000 for four years at 6 percent APR, what would her monthly pay- ment be, using the information in Table 7-2 or on the Garman/Forgue companion website? Present Value of a Single Amount (51) (Used to Compute the Discounted Present Value of Some Known Future Single Lump Sum) Appendix A-2 0.8700 02090 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 0.9004 :970909615 09 0 0 9346 092590911400091 0.00 0.00 0.88500.8772 0.1086 08521 0.15410.8475 0.400 0.3333 2 0903 0901209036 09.24 0.00 0 4 05 QMI 01608116 0.7972 0.7831 . 0.7961 0.702 .7305 071820.7062 0.6944 ) 0.9706 092 0:9151 O 0 0 316) 0.7938 072 07513 0.7312 0.7118 0.6931 06750 0.6575 0.607 0. 64 0.6086 0.5934 0.5787 0910092380 S 0 .48 0.8227 0.7321 0.09 0.7350 0704 0.6830 0.6587 0.6355 06133 09121 0.3718 0:5523 05337 0.5158 0 487 0.4823 5 09515 0.9057 0.6 0.8219 0.7835 0.1073 000 000 069 06209 0.5835 096740.5428 0.51940.4372 0.4761045610471 0.4190 6 0.94200 1200.375 0.7903 762 0.7050 0.0063 06:30 05963564505346 09066 0.43 0.4956 0.432) 4104 0398 0370401521 134 7 09127 0.806 0801 0.759907107 06651 0.02 0. 5 0.5470 0.5132 0.43170.4523 04351 099603759 0.538 0.3332 0.19 0.299 02791 # 09375 08535 0.7494 737 086 06274050200540 0.5019 0.4615 0439 0.4639 03762 0.3506 0326901050 021420260 027 02126 90.9143 0.368 0.64 0.7006 0644605919 05.09 2 0.4604 4301019090606033290307 02340 0.26300234 022550090 10 0.9053 0.0003 07441 0.6796 0.6139 0558405083 0.0632040340389503522 0.3220 0.2946 0265702472 2267 000 0.1911 0.1796 0.1615 11 896) 0.804) 0.721405496 0 7 0528 0.4751 0.478903875 0505 0.317) 0.2875 0.7601 .2356 02149 0.1954 0.1778 01619 16 0235 070 053660558 0.4370 0461009 03555 0.3136 0.2858 0.2567 0230702076 169 1685 01520 0.1372 01240 0.1122 0.7730 058100 5005 530) 0.4688 0.4190 6 7703252 02297 0.2292 0.20420.1821 01625 0.1452 12990116 01042 0.0935 0.7579 0.5611 5775 0505104330903405 029920.2633 0.2320 20460180201597 0.141) 0.1252 .1110 0098500876 0.5419 0.5553 0.00 0.4173 0 0.3152 0.27450.2194 0.1827 0.1599 0140101229 010 0094 0 0835 0.0736 0.0649 0.728 05232 05399 0.45810 136 033 0.2919 02519 02176 0.1383 0.1631 0.1415 0.1229 0.1069001000811 0.090800518 07143 03050 0:5134 0.4363 03714 3166 07703 0 2311 0.1978 1696 0.1156 0.1252 0.1078 0.0929 0.0802 0.0693 0 0600 0190 0.4996 0.299 0.750202120 0.17 0.1528 0.13000.1108 009460.0008 0. 01 0.052 0.050800437 0 0 :5703 0.4746 03305 0.276502317 0.1945 0.16 0.13 0.1161 0.09810082906703 0.6730 05537 04964 0.1759 03118 0.2534 02145 0.1784 0.16 0.1240 0.1037 0. 08 0.09800511 00365 08114 0.69 0.53 0. 0 0 3529 0242 0.2015 0.163 0.1351 0.1117 0. 06 0.0768 0.00 0.0531 000 0.000 00209 0.0009 0.0259 0.80 0.5468 05219 0.4.2001 03418 027 02 1829 0.1502 0.1228 0.1007 0.08.26 .0680 00550 0.04520032 00316 000 0 8 0.2109 0.170321378 0.1117 0.0907 0 0738 0.0001 0.0491 0.0402 0.0329 0.0270 0.0222 24 0.787606217 0.49190390103101 0200 0.1971 0157701264 0.1015 0.0817 0.0659 00532 00431 0.009 0.0050023100 350779 0.609 0.4776 0.1751 0.29530.233001842 1460 0.02 0.076 0.0378 26 07720 0.59760.0637 03607 02812 Q.1352 0.081900663 00525 0.04170031 0.006400211 0016900135 0.0909 27 0.16 0.85 0.45020158 025780207401609 0.1252 0.0936 001) 0.0597 0.00900369 00291 0.0230 00182 0014001150.000 230 05144 0.437 0213503551 01956 a 1 0 .1159 0.005 0099300538 0.041900026 0.025 0.020000157 00123 0.0097 290 099 056 0.434 0232070.142901846 0106 0.00 0.0002 0.0030 0.04 0.0374 0.0299 0.0234 00174 200500105 0.0002 0.0054 30 0.19 0.21 0.4130 00 0.2314 0.1741 01314 0.94 0.0754 0.057) 0.0437 00334 0.0056 00196 00151 0.0116 0.00 0.000 0.0054 00042 400611 0.45290.3056 0.2083 0.1430009720 668 0.045000918 60221 00154 0.0107 0.0075 0.005 0.00 0.00 0.0019 0001300010 00007 50 0600 0715 0. 21 0.10070002 0.054) 02130004 DOON 0001 0.001 0.0002 0.00 0.000 0.0006 0.0004 0000 0000 0.0001 0.064